ECB meeting is a focus today but it’s likely to be non-eventful. Monetary policy should be left unchanged. Following the recalibration in December, ECB would leave the size of the Pandemic Emergency Purchase Program (PEPP) at EUR 1850B and that of the Asset Purchase Program (APP), its traditional QE program, EUR 20B per month. The deposit rate will also stay unchanged at -0.5%. Some attention will be on policymakers’ view on recent Euro strength, discussions on QE tapering and economic impacts of renewed lockdown.
Here are some previews:
Euro is under some pressure this week along with Dollar, Yen and Swiss Franc. It’s clearly overwhelmed by the power in commodity currencies, on broad based risk-on sentiment. EUR/CAD has taken out 1.5313 support yesterday to resume the decline from 1.5978. EUR/AUD is a focus today, on when (more than whether) it would break through 1.5591 support to resume the down trend from 1.9799. Next near term target is 161.8% projection of 1.6827 to 1.6144 from 1.6420 at 1.5315.
